bill: l five a.m. over. you'll be back on what day? patti ann: i'll be back on thursday, we're doing early risers. i went out on a scalloping boat for six hours. bill: thursday? patti ann: yes. bill: see you then. "happening now" starts now. jon: and we begin with brand new stories and breaking news. jenna: democrats and republicans gearing up for another fiscal showdown on capitol hill, a little groundhog day action, if you will. this could again threaten to shut down the government. plus, dozens are dead after a tour bus loses control and plunges 100 feet off a highway. we'll tell you where it happened. and the travel experience once considered glamorous so many years ago is now anything but. how changes in the airline industry have passengers paying more for less. that's all "happening now." jenna: and we begin with a fox news alert on another big budget battle looming in washington. i'm jenna lee.

jon: and i'm jon scott. both sides digging in their heels over the raising of the debt ceiling. republicans propose deep cuts to medicare and the president's health care law while democrats say they've already done more than enough to get the debt under control. >> the president has made clear we cannot negotiate about whether or not the government of the united states would default. it was a mistake in 2011 to have that debate. it hurt the economy. and i think congress knows that it has to deal with this. >> we also have to look at how far we've already gone in with the federal government. this president seems to be using kind of a one-way ratchet, always expanding the role of the federal government even as we're $17 trillion in debt, and we're increasing that debt at the rate of about a trillion a year. jon: so take a look at the debt clock, it now sits just under $17 trillion, an amount now bigger than the entire u.s. economy. karl rove is a former senior adviser and deputy chief of staff to president george w.

bush, also a fox news contributor. crrl, look into your crystal ball. do you see a government shutdown ahead? >> i don't know. i don't think so. remember, jon, we don't have just one battle, we've got two battles. we've got a battle over the continuing funding of the government, the government budget year ends at the end of september, so there have to be provisions made for the new year, and then we also have the debt ceiling which will be hit in november. i thought it was interesting this weekend, the president said in "the new york times," quote: the idea we shouldn't pay our bills and plunge not just the united states, but potentially the world into another financial crisis makes absolutely no sense, end quote. that's what he said in "the new york times." i would remind viewers that in 2005 president obama, then a senator, led an effort in the senate not to pass the debt ceiling saying it was irresponsible for any president to come and ask congress to raise the debt ceiling. so the president's moral authority and those of his sporters and administration figures like secretary lew are a

little bit, their moral authority to lecture the american people and particularly their political opponents in the congress on this issue isn't very strong. jon: yes. and back then the debt -- the nation's level of debt stood at, what, about $10 trillion? >> oh, below that. below that. now look, we do have two battles here. we'll have battle over the debt ceiling which will take place later in the year in which the republicans will attempt to get further concessions on spending in return for approving the debt ceiling. but the first battle is going to be the battle over funding the government come september 30th, and this battle is going to be between two numbers. the senate democrats and the president support $1,058,000,000,000,000 in discretionary spending for next year. that's what the senate budget plan calls for and the administration supports. the house republicans use what's called the current law. this is what if all the laws that are in place require in the way of spending and the budget agreement of 2011, july of 2011 with the sequestration, if those caps are honored, then it's

$967,000,000,000. so the administration and the democrats in the senate want to spend $91 billion more over the year on discretionary spending than would otherwise be spending. in essence, the president wants to undo the budget agreement he arrived at in 2011 that had spending caps designed to bring the deficit under control. jon: well, and that presidential spending that you're talking about there, that pretty much eats up all of the tax increase that was approved at the beginning of this year, right? >> that's right. and, look, we have a decline in the debt, the deficit from last year. the debt continues to grow, but the annual deficit is shawler this fiscal -- smaller this fiscal year than last. however, that's a temporary reprieve. the congressional budget office and the office of management and budget say the deficit will reduce, the annual deficit will reduce and then start to grow again, and during the entire time the debt keeps growing. and as you said in your

introduction, the total debt of the united states both public debt and what's called intergovernmental obligations, that total debt is now bigger than the size of the u.s. economy. jon: i don't know of a family or a small business that hasn't slunk its budget over -- shrunk its budget over these last few years of economic be malaise. why can't the federal government seem to do it, karl? >> well, that's a good question. and realize the republicans in the house aren't asking to shrink the budget relative to years past, merely to moderate future increases. part of this is because we have so many programs, about three-quarters of the budget is now mandatory spending that's on autopilot, so the republicans are saying simply let's moderate the future increase, and you can do -- jon: karl rove, thank you. jenna: here's secretary of state kerry with a big announcement today about middle east peace talks. let's take a listen. >> at this moment and what our hopes are after our initial meetings conclude tomorrow.

this effort began with president obama's historic trip to israel and ramallah in march of this year. and without his commitment, without his conversations there and without his engagement in this initiative, we would not be here today. the president charged me directly with the responsibility to explore fully the possibility of resuming talks, and in our meetings with president abbas and prime minister netanyahu, he conveyed his expectations for in this process. getting to this resumption has also taken the courageous leadership of prime minister netanyahu and president abbas, and i salute both of them for their willingness to headache difficult decisions -- to make difficult decisions and to advocate within their own countries and with their own leadership teams. countries with the palestinian territories. i would also like to recognize

the important contributions of senior negotiators on both sides, particularly minister livni and -- [inaudible] both of whom really stood up and stood strong in the face of very tough criticism at home and whose unwavering commitment made the launch of these talks possible. i look forward to beginning work with them tonight. going forward, it's no secret that this is a difficult process. if it were easy, it would have happened a long time ago. it's no secret, therefore, that many difficult choices lie ahead for the negotiators and for the leaders as we seek reasonable compromises on tough, complicated, emotional and symbolic issues. i think reasonable compromises has to be a keystone of all of this effort. i know the negotiations are

going to be tough, but i also know that the consequences of not trying could be worse. to help the parties navigate the path to peace and to avoid its many pitfalls, we will be very fortunate to have on our team on a day-to-day basis working with the parties wherever they are negotiating a seasoned american diplomat, ambassador martin indyk, who has agreed to take on this critical task at this crucial time as the u.n., u.s -- excuse me, u.s. special envoy for israeli-pal stop sign stint yang negotiations -- palestinian negotiations. assisting martin will be as his deputy and as a senior adviser to me will be frank lowen steven who has been working with me on this process from the beginning. in his memoir about the peace process, ambassador indyk quotes

a poem that begins: if men could learn from history, what lessons it would teach us. ambassador indyk brings to this challenge his deep appreciation for the history of the israeli-palestinian conflict. and from his service under president clinton, secretary christopher and secretary albright, he brings a deep appreciation for the art of u.s. diplomacy in the middle east. that experience has earned ambassador indyk the respect of many, and they know that he has made the cause of peace his life's mission. he knows what has worked, and he knows what hasn't worked, and he knows how important it is to get this right. ambassador indyk is realistic. he understands that israeli-palestinian peace will not come easily, and it will not happen overnight. but he also understands that this is now a path forward, and

we must follow that path with urgency. he understands that to insure that lives are not needlessly lost, we have to insure that opportunities are not needlessly lost. and he shares my belief that if the leaders on both sides continue to show strong leadership and a willingness to make those tough choices and a willingness to reasonably compromise, then peace is possible. ambassador, i'm grateful that you've agreed to take a leave from your post at the brookings institution to serve once again in this most important role, and i know that you are eager to get to work, as am i. martin? >> thank you. jenna: secretary of state john kerry announcing the resumption of peace talks between israel and the palestinian territories. ambassador martin indyk has worked in a variety of different administrations, as secretary kerry alluded to there, has been part of peace talks before.

a big question that surfaces now is what can be done in 2013 that hasn't been done in previous years? the question that we're going to be taking a closer look at throughout the next several days and months is what does this mean, the resumption of peace talks now at this time for us in the region and for our allies such as israel? what does this mean about iran and egypt and some of these other big countries in regional conflicts. we'll keep you posted. if you'd like to hear the ambassador be, he's speaking right there at the state department in a briefing room, and you can see that at foxnews.com. jon: what a job he's taking on, huh? jenna: big one, right? jon: that is. well, anthony weiner, the new york city mayoral candidate, is not the only high profile democrat mired in a sex scandal, so are these controversies hurting the party that once claimed it was the gop waging a war on women? and yankees slugger alex rodriguez reportedly facing a major decision that could mean the end of his baseball career. we'll tell you about that coming up. ♪

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jenna: welcome back, everyone. a look at international headlines today including this one out of india. protesters are clashing with police there, government workers are upset about not being paid on time, and police are using water cannons to try to break up the violence in what can be a very volatile region. china giving a rare glimpse of its military, taking media on tour of its bases. the defense ministry showing off some of china's latest and most sophisticated anti-aircraft and anti-ship weapons. and pope francis opening up a news conference on his flight back to rome from brazil. the pontiff saying he enjoyed his first be overseas trip saying he especially liked the minimal security, that was a little wit controversial. he traveled amongst the crowds without bulletproof glass or armored cars, and he liked it.

he also hinted his next trip may be to asia. jon: now this fox news weather alert. hawaii is bracing for heavy rains and strong winds from tropical storm frost si. the storm weakened over the past few hours, but sustained winds of up to 60 miles an hour are expected today. meteorologists warn flash flooding, tornadoes and mud slides also possible. hawaii's governor already declaring a state of perjury there. residents are hard at work getting ready stocking up at basics at grocery stores and other places. of others, including boat owners, are trying to make sure everything is tied down. some have decided to take their boats out of the water altogether. pretty good idea. meanwhile, heavy rains impacting millions across the country including residents in philadelphia where heavy rains shattered records on sunday and turned roads into be lakes making travel nearly impossible. jamie colby live in our new york newsroom with an update on that. >> reporter: great to see you. i'm going to tell you about some

industrious folks toward the end, but right now it really was a wicked weather weekend through much of the nights. first of all, i want to tell you about north carolina. in north carolina they had some severe flash floods, heavy rains, and it was blamed on the deaths of two people, a 10-year-old girl and a 48-year-old man who were literally swept away while swimming if a creek that reached 2 feet above normal. authorities there say the two were immediately swept away. they really didn't expect these swift waters and winds, and they have recovered both of those bodies. very sad. it was also the worst flooding that north carolina had seen in 70 years. one county there actually reporting as many as 130 homes and businesses suffering damage. some of it was actually severe. let me tell you about las vegas too. you might want to check before you head to any of these places on vacation, because the normally dry las vegas valley got slammed, more than 2 inches of rain sunday afternoon leaving vehicles stalled on interstate 2

b 15, and that resulted in extensive flood watches. probably one of the worst pictures i've seen was in arizona where a tour bus that was carrying 31 people flipped over during heavy rains they had. miraculously, there were no injuries reported. these flash floods were also reported in other parts of arizona. and then remember those folks i told you about? well, it was a record one-day rainfall in philadelphia. they haven't seen it since 1999. more than 8 inches sunday alone, and that caused flash flooding, power outages, and don't you hate when this happens, one of the terminals at philadelphia's international airport literally in the dark. no computers. it happened for several hours when they lost power, and their backup generators failed. >> we sat -- >> happy wedding. >> we landed. so who knows what happens. all the computers are down. we don't know if we're booked on another flight, they can't check our baggage, so down 95 we go.

>> reporter: they got in the car, and they drove, carefully. many folks are still on edge, jon. kansas, north oklahoma and the texas panhandle all forecasting that flash flooding and thunderstorms which could continue through tonight. so we want you all to be safe out there. jon welcome back and we hope brandy's hubby and his new wife have themselves a great honeymoon. >> reporter: they were still smiling. gotta love it. jon: i hope they're still smiling after that car trip together. >> reporter: that's the true test, jon. jon: oh, yeah, i know. jenna: legend dare boston mobster telling his sign of the story as defense witnesses take the stand in his trial. the big question, will whitey bulger take the stand in his own defense? one of america's most wanted. our legal panel weighs in on the case next.

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jenna: well, "happening now," sex scandals rocking democrats from coast to coast raising new questions about the impact on the party. in new york city anthony wiener and eliot spitzer are asking voters for a second chance after both men resigned in disgrace. while san diego's mayor, bob filner, has refused to step down amid sexual harassment allegations. doug mckelway, what are we hearing from both parties on these issues? >> reporter: well, you know, when it comes to these kinds of sex scandals, neither party is immune, but the present array all are democrats, of course. there's a sense among a lot of analysts that republicans are held to a higher standard perhaps on the theory that conservatives tend to preach morality and family values and, therefore, are often accused of hypocrisy when they commit moral offenses. but in the case of wiener, spitzer and filner, we're hearing condemnation across the spectrum of political views. >> the issue here isn't about his relationship with his wife, the issue is about his

relationship with the voters. he's twice deceived them, lied about his activity, and why would you repose trust in someone who did that? but i think that he is delusional at point and doesn't understand -- [inaudible conversations] >> do himself and everybody a favor and just step to the sidelines. he's not qualified, not psychologically qualified to be mayor of the city of new york. >> reporter: now, there's a case to be made that democrats often survive these kinds of scandals more than republicans as republicans tend to resign in the face of them, but that's not always the case. witness mark sanford be who has rekindled his political life. jenna: we'll take them case by case, at least for the time being, doug. on the anthony weiner case specifically, his wife has received a lot of attention because of her mentor, hillary clinton, and some have suggested that she's following in hillary clinton's footsteps in this way trying to help her husband survive these indiscretions. what can you tell us about that? >> reporter: yeah. that appears to be the pattern.

hillary, of course, has stuck by her man. she survived as diss -- as did her husband. that appears, however, not to be working for wiener's wife. speculation is loyalty may hurt her, it certainly has hurt her husband whose popularity has plummeted in recent mayoral polls. jenna, back to you. jenna: doug, thank you. jon: right now in boston the first be defense witnesses are taking the stand in the racketeering trial of james "whitey" bulger. period of times rested their case friday after calling 63 witnesses. bulger, as you know, is charged with playing a role in 19 murders and running a lucrative criminal enterprise involved in gambling, extortion and drugs. dan shore is a former prosecutor, ashley merchant is a criminal defense attorney. his attorney, dan, is saying he'll call maybe eight witnesses today, maybe seven witnesses tomorrow. there is speculation that the

jury could get the case on wednesday, but what if whitey bulger testifies himself? >> that would be very dramatic. we've already seen him curse at at least one witness who accused him of being a rat. and this is when whitey bulger was just sitting at the defense table, so he couldn't restrain himself. so he might want to testify. but let's remember, their goal probably is not to get an acquittal here. he's facing 19 murder charges, he's almost certainly facing the rest of his life in prison, so their focus is to prevent him from going to jail known as a rat, known as someone who's killed women and known as someone who has committed pedophilia. those are the things they seem most focused on stopping, not necessarily the conviction which is almost certainly going to happen. jon: so, ashley, if dan is right, what better way to establish your bona fides than to get up on the stand and say i'm not a rat before going to jail? >> well, first, i would love to see him testify. i think a lot of america would love to see him testify, but i

don't think that's going to happen. what's he going to do, say, oh, no, i didn't commit these killings? he's got way too much damage and way too much bad things in his closet to get up there and take the stand. i just don't think his attorneys will ever let him do it. jon: yeah, but in their opening statements didn't the other atts admit to a number of the charges against them that essentially will put him away for the rest of his life? >> they did. i think there's a lot more, though, that they have not admitted to and they're not willing to put him on the stand to, basically, let him open that can of worms. jon: but, dan, going back to your point, if he's just trying to avoid going to prison being seen as a rat, why not get on the stand? what does he have to lose? >> he'll be confronted with evidence on cross-examination that he was a rat or that he committed killings of women which is another bone of contention from the defense. so by testifying he's going to reopen all these issues, and he's going to be further exposed, and he doesn't seem

like he has the demeanor to stay calm and focused in the face of cross-examination because of his outbursts in court earlier. jon: and, dan, just for the viewers who might not know, if you're whitey bulger, why do you not want to go to prison being, you know, carrying the reputation as a rat? >> first of all, it undermines his whole career in organized crime. he won't be known as someone who was this boss and was very powerful, but someone who undermined his own colleagues, the people who worked with him, the people who committed crimes with him. they'll say that he went with the fb with i and going to prison like that is not the way you want to go because other people may go after him, and his legacy and his world will be great tally tarnished. jon: so, ashley, are you thinking we'll get this case to the jury this week thensome. >> not based on how this case has been going. so far we've had one of the defense witnesses testify. and he's been on all morning. and he hasn't even been subject to cross-examination yet. i think what the defense is going to do is, essentially, tell whitey bulger's story through their defense witnesses.

so i don't think there's any chance this case will be in the bag by be the end of the week. jon: even a reputed mobster has his reputation to protect. ashley, dan, thank you both. >> thank you. jenna: what is happening with america's favorite pastime? some new fallout from the big scandal rocking baseball. a-rod is reportedly facing a possible suspension, even a lifetime ban from the game for his alleged involvement with performance-enhancing drugs. what this means for the league overall and all those players that your kids watch every day. plus, what prompted this?

jenna: turning out the new fallout in the steroids scandal rocking major-league baseball. there are now reports new york yankees slugger alex rodriguez must choose between his suspension until the end of next season or a possible lifetime ban from the game. part of a larger performance-enhancing drugs scandal involving biogenesis reportedly involved at least a dozen major-league players in giving them things they should be taking. field producer for major-league baseball. we have heard about this for

years, will this be different this time around? because it is a-rod? >> most likely. we don't know how long the suspension. certainly all these things you are hearing, lifetime ban, this year and next year, they all seem to be in play but the question is what baseball can accomplish. if he will appeal or serve his suspension. jenna: what are you hearing? >> i am hearing he doesn't quite know yet. this is up in the air. a lot will against him. what baseball is showing they have against him and the type of deal baseball offers. these conversations are going on right now, a-rod can change his mind quite a few times. jenna: so we're looking at his case. baseball is the american pastime, what are the ramifications of the game overall basin what happens with a-rod, how his case is handled? >> for the pursuit of how they

handle performance-enhancing drugs, this has been very positive. they would also the testing program to conduct this investigation. ryan braun has already agreed to the suspension. he is a guy that eluded them for a while. he beat the test last year because he challenged the procedure and when the appeal. he has been suspended. baseball clearly is taking a very aggressive stance. too aggressive in the eyes of some. in terms of the future, will the union be upset by what is going on because the unions partly joint drug agreement, will they be partial to what is going on? these are all questions that will eventually be resolved and answered, but right now the questions are who is getting suspended, when and how long. jenna: we have heard suspensions

before, when we look over baseball history, may be the lifetime isn't that unusual. but for a-rod, this is the first time we are hearing more about it. he could be suspended for life. why him? is major-league baseball singling him out because he is such a big star, big earner, and he has eluded them for years, or is this a little bit of are they going after him unnecessarily? >> without knowing evidence, it is uncertain to say. perhaps he has lied to investigators over the years. there is a feeling he might have obstructed this investigation. these are some of the things allegedly happened. jenna: you covered baseball for years, what is your sense on it overall, people do strength training and other fitness, what

is your sense about the way performance-enhancing drugs are being used compared to five, 10 years ago? >> lessnau, but it is human nature. therthey will be chemist and dos who find new drugs that are not deductible in testing. i don't know baseball ever eliminates the problem or any other sport, but have they made progress? there's no question question i have made progress. jenna: is a-rod agrees to some sort of suspension he can still walk away with $60 million, how is that the case? >> view this phase of this year and next year, he still guaranteed money. that contract is pretty much unsalable. keep in mind he is this better than us of year and next year he will effectively have missed two years coming off of hip surgery,

who knows what state he will be as a player at that point. jenna: thank you very much, nice to have you in the studio. jon: more baseball news. could you were the possible punishment from david ortiz. after a very angry big papi unloaded his frustration in the dugout after again this weekend, live now with the fox 411. >> this is not the ideal form of anger management. he is known for swinging his bat, but just about the only thing he hit saturday night was the dugout phone. watch as he goes off after being called out on strike and later ejected from the game in the seventh inning. >> he took all the way. ortiz ends up striking out.

>> oh, my goodness. some want to show more. they took upon themselves to fix the busted phone. can you hear anything? he got a big laugh out of that one and was clearly in better spirits for sunday's game going 4-for-4 including this. >> hits one high-end deep to left, back to the track, it is gone. >> the red sox won that game 5-0. other teams are having fun with this. the tampa bay rays tweeting out there need for a steel alloy telephone with ally core. sparing no expense the next time

the red sox visit in september. no word whether or not it will fine ortiz for damaging the phone. jenna: i always wanted to do that. jenna: i thought he almost did last week after one of those hits. jon: that is why the pros will never go to the aluminum bat. >> no, they will not b. jon: all right, thank you. jenna: make yourself feel better. what we do, right? i am watching you, jon scott. it doesn't matter if you're going on vacation or traveling by business, you will face plenty of hassles. a look at the state of the air travel industry. and they may not have a soul, but it looks like they could be having some fun, actually.

robots playing frisbee? we will explain.

jenna: house republicans will vote for the 40th time to repeal parts of obamacare. learn the details of how one city plans to use the overhaul to save money on retiree benefits. the effect on that nationwide, we will tell you about it. and waiting on the wikileaks case. and europe's top diplomat holding talks with egypt after following the worst violence since the ouster of president morsi, ahead. jon: most airline passengers these days find they are paying more and getting less. the whole flight experience, once considered so glamorous becoming more of an ordeal these days. a former chief counsel to the federal aviation administration advising some of america's largest airlines and airports and has written a new book

called "the full upright and locked position." it has stories both airlines you probably want to read before you take your next flight. what is going on with the airlines these days? for years it seemed like they were losing money hand over fist. now they're making money? >> they are, john. it was flat on his back in 2008 with fuel prices going through the roof, now they are making money. they are in the blackmail. part has to do with nickel and timing scheme everybody loves so much. i get these for instance. why can't they just add $50 or so to take it? >> folks say they will pay a little bit more to get more service on airlines. they probably are not. we go to the lowest fare on the internet and the airlines know what they are competing on the base fare, but they have to make

it up somehow. revenues from all these other things. jon: these high-profile accidents lately, the crash at san francisco international, a hard landing at laguardia. what is going on with safety? >> you are right, there always instances. the system is really incredibly safe we had the last time we had a major air crash about four or five years ago, an mit professor recently had an analysis where he said you have to fly every single day for 63,000 years to be involved in a fatality. so far so good. we had an incredibly good record in this country. jon: they are filling the planes to the brim, every seat is full these days. some danger of running into

problems just because the system' is packed to the max? >> we are maxing out, as capacity in the system. the people talking about having 1000 seats on an airplane. that means you have to get thate people often evacuate them in the case of emergency. so far so good, but we are maxing out. jon: what about the regional planes they have relied on? >> they have had issues. while the system is safe as well, a lot of people think the statistics are just not as good in terms of safety for the commuter airlines. they're working on it. they are addressing the fatigue issue that have. there are other issues like

making sure everybody has experience level necessary to operate passenger aircraft. jon: ministry will have talked about another time. upright and locked position. thank you. >> thank you for having me. jenna: you think of roundup in texas, he may think of something different than this next story, but an unusual frisbee competition featuring robots. the frisbee throwing robots face off in austin, texas, over the weekend in the third annual texas robots roundup. 42 teams battling to determine who had the best robots. this year they had to fling a frisbee a target and climbed up the tower. that is what they did in texas. i was looking for the winter, could not find it. maybe we had to find out who actually won it. jon: lego enthusiasts can rejoice. a new round of building blocks

just for adults. the so-called architecture studio cost $150 common with more than 1200 all-white lego's, 73 different pieces and styles, a book with architectural designs and buildings included in this set to make a taj mahal. limited number of sets available at barnes and noble. jenna: remember the legos guys? jon: i was kind of surprised. jenna: and nationwide operation for children forced into prostitution. the fbi launch a series of raids over the weekend. what they found is heartbreaking and we will tell you the latest on that. the state department announcing a special envoy to spearhead some brand-new middle east peace talks. the latest efforts next.

jon: a building collapsed in philadelphia, witnesses reportedly heard an explosion at that house in south philadelphia. on 400 block of dail bailey str, we're told. explosion, as you can see the roof was pretty much lifted off at home, a whole lot of rubble left behind. responders are setting up a command center at fourth in philadelphia. no word yet on whether --dash we know six people have been

injured, no word on how severe those injuries are. we will keep an eye on what is going on. it looks like some sort of a gas explosion but a little too early to state that for sure. we will let you know what happens as investigators learn more. jenna: the fbi's announcing the result of a three-day national undercover investigation targeting the sexual exultation of children. take a listen. >> public awareness is critical to addressing these deplorable crimes. it has shown us trafficking and child prostitution still exists in our streets. jenna: on the story life in washington. steve. >> that is a tragic situation really. children's history of sexual abuse, neglect and trauma are running away from foster homes lured into a life of prostitution. this operation is one of seven

that has been conducted over the past 10 years called the largest action of its kind so far. here are some of the details of what they're calling "operation cross country seven." connecting 37 searches beginning friday. they were conducted and 76 cities across the country and as a result 105 children were recovered major ages from 13 to 17. 150p arrested. 230 federal state and local law enforcement officers were involved. officials say this problem is only getting worse. >> temps market and sell children openly at popular online classified sites. they sell them at truck stops and the sell them on streets in every majors city in america. >> a few have gotten life sentences.

the pimps are sometimes individuals working alone, sometimes part of gangs. they are kids with low self-esteem is a difficult childhoods and some as young as nine years old. 60% of them come from the foster care system. the children recovering operations were given help in hopes it will not return to the streets. jenna: thank you. jon: still ahead, rain that just won't quit. flash flooding impacting wide sections of this country. janice dean will have your full forecast for you. plus, is there anything russian president vladimir putin cannot do? from riding his horse bare chested to tae kwon do, now he is showing off his latest skill. wait until you see.

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jon: right now, brand-new stories and breaking news. certain estate announced a new envoy who will head up the first peace talks in years between israel and the palestinians. we will take you live to the state department. as egypt reels for more deadly violence in the streets, dozens of muslim brotherhood supporte supporters, we will get a live report. also, an amazing ecological find in this country that sheds light on america's earliest days. and what can be the first settlement of free african-american. ♪ jenna: noon here on the east coast, new developments in the irs scandal. great to have you with us. i am jenna lee. jon: and i am jon scott. welcome to the second hour of "happening now." conversely rocking the agency. they labeled a phony washington

scandal. now charges that not enough is being done to get to the bottom of what is sparking the scrutiny of conservative groups. jack lew, treasury secretary oversees the test collection agency put on the defensive with our own chris wallace going after him. take a listen. >> have you asked the irs chief counsel appointed by president obama what involvement he or his office had in all of this? >> chris, to be clear, there are 1600 lawyers in the office, and there was no suggestion this went to the one political person in that office. no evidence of it, there has been no evidence of that. >> have you asked them? >> of these investigations to the proper people who do investigations. it is not appropriate for me to do the investigation. >> if somebody asks what he knew about this. >> there is no evidence this

went to any political official. >> has not been an investigation. inspector general never conducted investigation, he connected an audit. where is investigation? >> lifetime is going to ask a lot of questions to a lot of people. we will cooperate with the ongoing investigations. jon: well, joining us now, bret baer, the anchor of "special report." the question was not how many lawyers work for the justice department, the question was have you spoken to william wilkins, the head lawyer there. i am not sure chris ever did get an answer. >> i don't think so, jon. at the end, a lot of questions asked to a lot of people. lot of questions were asked in that very interview to the secretary that were not answered. william wilkins, chief counsel for the irs is one of two political appointees in the irs.

testimony in these investigations in the hearings from another irs official said he was told to put up any applications of tea party applications up to william wilkins. that was testimony in the house hearing. what we don't know is how far this goes, we don't know the answer to what the secretary says that no political appointee or political official wading in any way, shape or form. iif you knows that, the investigators in congress do not. jon: the numbers show there was a huge disparity in the number of conservative groups that were flagged for special scrutiny by the irs versus liberal groups, right? >> i think the numbers are 29827. there were progressive groups

with the name progressive in there, but the numbers, you are right, our big disparity to the conservative groups. jon: the white house or jack lew is suggesting that it was just because some folks at the irs badly handled the floggings? >> that is what he is saying, equal opportunity in the targeting of the groups. sheer numbers indicate that is probably not the case. the other thing is you don't have a lot of grieving parties on the progressive side coming out and saying they were delayed by up to several years forgetting their status. these investigations are continuing and will likely continue as the administration tries to turn the page and call them phony scandals. jon: by doing so they're hoping what, the press will pick up on that label and just leave the

investigations of these things alone, let them drop off the public radar? >> sure. the hope is that continually saying it, eventually it will sit in and there will be some influence perhaps on the white house press corps. it may in fact happen that way, investigation themselves will continue and we will continue to cover them on the fox news channel. there may be other witnesses including others who yo you'll remember to the fifth, she may be given some sort of community to tell her side of the story and what exactly happened in those offices. remember this whole thing started with in ministration saying definitively it was rogue agents in cincinnati, a few rogue agents. after hearing after hearing after hearing it is not that. what it is, don't think people know despite what secretary lew

said. jon: does not sound like a phony scandal, and that is what the president wants to call it. thank you for keeping an eye on it, bret baer. you can watch here on the fox news channel. jenna: how will that hurt the industry? jon: they get blamed big-time. jenna: we will stay with washington, d.c., and a new showdown brewing over the debt ceiling which now stands at well over $16 trillion. as the white house and how the public and the capitol hill digging over how to pay americans avoid a government shutdown and what to do about across-the-board budget cuts. live with more on all of this. how is the white house approaching this over the debt limit? >> they are saying essentially it is up to congress to find a way to fund the government and raise the debt limit without cutting spending anywhere.

the treasury secretary said the obama administration has done plenty enough lately to reduce the debt for their position is the united states cannot cut its way to growth and they look at sequester as proof of that. >> congress has to write bills that meet the challenge the president set forth to invest in the future. congress cannot steal from domestic priorities to fix rd cuts have cost in defense. >> we reached the debt limit back in may and using extraordinary measures to pay the bills since then. but the government runs out of money really september 30. jenna: okay. so republicans, how their approach in the battle, what about republicans, what seems to be their strategy here?

>> there standing firm saying if any increase in the debt limit needs to be offset by equal or greater amounts of fresh cuts, we're now seeing republicans look at the obama administrations decision to delay the implantation of that employer mandate in obamacare, if the law is not ready, should not get any money. >> we know the government is going to get funded. ththough the questions of the government gets funded with obamacare or without it. he said he is not ready to implement the law. it is not ready for prime time. if it is not ready, he cannot find it. >> the battle over the debt limit will have to wait until after labor day because of capital august recess starts next week. back to you. jenna: thank you very much. we are going to take a look at how the debt limit spike really expanded in the bipartisan

nature. president clinton clashed with g.o.p. controlled congress in november of 1995 leading to a government shutdown. congress raised the debt limit in march of 1996, and congress only had to raise the limit one more time during president clinton's term, so that is the history under president clinton. going from seven times more than $11 trillion during his time in office. during president obama, the debt limit was raised three times until the latest blowout we saw with house republicans back in may of 2011. currently the debt limit roughly $16.8 trillion. jon: a couple archenemies talking peace. they begin the first direct negotiations later today in washington. to help move the talks along, century of state john a short

time ago in the former u.s. ambassador to israel as u.s. middle east talks on board. live at the state department. the secretary has been focused on this moment really since he took office earlier this year, right? speak of the secretary has made number of of trips to the middle east pushing for this moment but the agreements really came together or began to come together around the time of president obama's trip to the region in march. the goal is to set up a framework to deal with the final status issues, the future of jerusalem, the palestinian state, the right to palestinian refugees and israeli security and the secretary says it will not be easy. >> it is no secret therefore many difficult choices lie ahead with negotiators. to the leaders as we seek reasonable compromises, tough,

complicated, symbolic issues. reasonable compromises as to the keystone to all of this effort. >> he helped broker the 2000 agreement that was almost agreed to come as close as they come to an agreement between israel and palestinians ge. they know what works and what hasn't. jon: it seems like not everybody's happy with what is going on right now. >> the polls suggest the israeli people are unhappy with the prospect of resumed peace talks but the decision to free 100 palestinian prisoners divided them 13: 7. the prisoners crimes included killings in the 1980s and 90s involving israeli soldiers, women and children, and the palestinians demanded the release of the goodwill gesture for the finance minister said that was a tough call.

>> everybody feels bad about the community because it is terrible history but we have to do what we have to do. >> meanwhile palestinians insisted the prisoners were fighting against israeli occupation saying there release allow the israelis to sidestep other palestinian demands such as ending settlement construction and agreement to base a talks on pre-1957 borders, neither of which prime minister netanyahu have agreed to. jon: they get the process rolling, anyway. thank you. the search for peace in the middle east has been a long and winding road. let's take a quick look. in november of 1991 madrid peace conference set out a framework for the peace process bringing longtime enemies in the wake the persian gulf war. roughly two years later israel

and palestinians signed declarations of principle. in july, 2000, then president clinton hosted leaders at camp david. those talks collapsed over core issues sparking a new palestinian uprising. that brings us the most recent efforts president obama wants to direct talks at the white house nearly three years ago. wilwith today's talks succeed we others have failed? we will analyze this a little bit later in the hour. jenna: one of the big questions is what does it mean for the region looking at egypt, violence spiraling out of control there. what police in the country are doing to stem the worst light shed since president morsi's ouster. and the latest crash in san francisco'san francisco sparking recommendations from the faa. plus new developments in the battle over obamacare from another vote to repeal it and

what they hope to do with it. that is ahead. >> if the presiden president isy to implement the law, if the was not ready for prime time, congress should not fund it. [ male announcer ] this is kevin.

to prove to you that aleve is the better choice for him, he's agreed to give it up. that's today? [ male announcer ] we'll be with him all day as he goes back to taking tylenol. i was okay, but after lunch my knee started to hurt again. and now i've got to take more pills. ♪

yup. another pill stop. can i get my aleve back yet? ♪ for my pain, i want my aleve. ♪ [ male announcer ] look for the easy-open red arthritis cap. jon: new recommendations for a federal aviation ministration in the wake of the deadly asiana crash in california. and advising all airlines to use gps system when landing at san francisco international airport instead of relying solely on site and instruments in the cockpit. the flight 214 was cleared to make a visual approach that crash landed earlier this month. nearly 200 people wounded. many pilots sa to this airport s notorious for tricky landings. jenna: at fox news alert with mounting violence in egypt. police rounding up more islamist leaders right now.

europe's top diplomats hold talks with the rivals. following some of the bloodiest violence over the weekend. live with the very latest for us now. >> jenna, right now a very tense calm. we don't know how long it will last. they're pushing each other about as hard as they can to figure out which side is going to break first. the muslim brotherhood spent the week burying those who died when they did not stay inside. a number of funerals turned violent themselves. theit has been protesting for ws now the army took over and kicked out and asked on present president mohammed morrisse mor. their play more marches and tens of thousands of people brought to the streets.

the violence was overwhelming. the crack of live ammunition rang out, huge volumes of tear gas as riot police, the army, the protesters, local residents all clashed because we are not sure who ended up firing all of those fatal shots. as of now the army has said they will not tolerate any more marches like this. the list is issued strong condemnation of violence you saw. they're trying to negotiate with the army, with the muslim brotherhood. this could all come to a head in the next couple of hours. you have evening prayers during the muslim holiday of ramadan. and we're hearing there could be another plan by the muslim brotherhood that they have warned again and again they will not tolerate in this part of the world typically means the army

would do something about it. that could be like what we saw this weekend. jenna: thank you. jon: and then there is this, the moment of truth fast approaching for bradley manning i the mility judge deliberates the fate of the man who leaked massive amounts of secret documents to the wikipedia website. [ rob ] our daughter is all kate. same grin, same walk. and the same beautiful hair. [ female announcer ] nice 'n easy. in one step get expert highlights and lowlights. for color they may just think you were born with. [ rob ] i'm a lucky guy. [ female announcer ] with nice 'n easy, get the most natural shade of you.

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jon: right now the fate of bradley manning in the hands of the military judge. u.s. army private behind the massive leaks of military and the my documents accused of violating the espionage act and aiding the enemy. lives from the new york newsroom with that. >> it is day three of deliberations for the military judge who is designed to handle manning's case.

the forward towards alice faces a life sentence for aiding the enemy and 20 other counts including espionage, computer fraud and also theft. he's accused of leaking 700,000 classified with her documents and diplomatic cables to that website, wikileaks. they have to prove he had an evil intent in aiding the enemy. and to convince the judge manning in those documents would end up in the hands of al qaeda. as intelligence expert he was trained to know just how important this information would be to al qaeda once it had been released publicly. that is key. the government alleges manning through working for wikileaks when he deployed to iraq in 2009. he wa was not a whistleblower, e was a trader, says the prosecution. the defense has not denied leaked the documents but rather they claim he was just a naive young soldier who said they can make a difference in policy.

the sentencing then begins. jon: thank you. jenna: republican in the house will vote for the 40th time repeal parts of obamacare to prevent the irs from incrementing the law. we also learned detroit can use parts of the health care overhaul to offset the cost of the retirees health care benefits with some onto the national health care exchange. in the meantime,"the new york ta massive defense over the signature legislation. singing praises and the editoril board: republican tactics on health care despicable. joining us now, managing editor of the hills.

the policies of this law trying to go into place. only have about two months until it comes out. who is winning the battle of the politics of it all? >> it is it that mix. they're going on the vote on the house floor this week which would prohibit the treasury department from implementing any part of obamacare. the irs is taking the lead on individual mandate. last week they were able to split democrats onto bills, one that would have delayed the individual mandate just like the obama administration has delayed the employer mandate. all republicans on the same page there, doesn't the democrats not. not to fund obamacare. a lot calling for that, but republican leaders have not echoed that call, and that situation they are very nervous

about because of the government is shut down because of obamacare funding that can boomerang on the g.o.p. jenna: you believe they do not want to go into that line of crossover in. speaker they have faced this before, every time they've assisted obamacare be funded and every time it has been funded not to the point the white house wanted, but no defunding obamacare bill passed. jenna: you have a lot of folks retiring, they are not 55 and cannot go to medicare. they are not in medicaid. detroit is take a look to say we can't pay our bills but if the insurance exchanges are open, maybe our people in a couple of years can use the exchanges,

subsidized by the federal government and we don't have to pay any more. we don't know if that is going to happen, but what does it mean for the implementation of this law? >> it has huge impact because cities are clearly looking at a way to shift the cost they have the federal government three price tag could skyrocket if this happens. whether they are retired or active little nervous of what might happen. we don't know how obamacare will play out. the white house promised premiums would go down. lot of unions are very nervous about this and once again the price tag for the federal government could go up because of detroit does this a lot of other cities are going to do this as well. jenna: pointed to chicago, they could be doing the very same thing. both sides will tell you different thoughts about the

cost of the bill with premiums and what it means to everybody. we don't know what happened to premiums unless you know how many young people join us because that is what the bill is based on getting the young people to help offset the charges for the older population. when this is debate over the health care really and? most of the health care law is in place but the government realizes it did not work according to plan. we cannot pay for it ourselves and the debate is continuing. >> in theory one party will be able to say i told you so. they will pick up positive and negative aspects of the law. that is why they have approved the nfl and the nba because they have to make obamacare cool so young ma men in particular will sign up for that, but will they pay hundreds of dollars to get

health care coverage instead of just risking it and if they get hurt, go to the emergency room. we don't know the answer to that yet. jenna: interesting piece. profiling these young men in portland, oregon. playing battle star galactica. not a likely candidate. >> one thing is individual mandate penalty is only about $100 in the first year. lot of people will say i will risk it if the irs goes after them leading to negative headlines for the obama administration. jenna: it could be a couple of years before you see it. thank you very much. look at the politics and the policy in the weeks to come. >> thank you. jon: record rainfall, are more downpours on the way? what is going on? ( bell rings ) they remind me so much of my grandkids.

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jon: there are some new numbers on a housing front according to one reporter, quarter of homeowners are underwater now meeting they owe more on their mortgages than their houses are worth. actually an improvement from last year. streaming live from newton massachusetts with that. >> the number of americans actually bought homes in june to the little bit of a dip over a

six year high in may but that does not change things with the negative activity report put out by th zillow this is 25% of homeowners are underwater. an improvement over the last to win about 31% of people found themselves upside down. a small consolation, and improvement and consolation for people really hurting right now. betsy is one of those people hurting. five years ago when the real estate market was booming she found a two-bedroom townhouse. like millions of others americans choose upside down plus also battling some serious health issues and stands to lose $50,000 in a short sale. >> the market and the economy just like tanks, it was awful. you keep thinking you're going

to have some sort of profit on your property if you ever want to sell it. after five years is kept dropping and dropping and dropping. >> massachusetts property manager owns his own firm and doesn't expect to see a dramatic improvement anytime soon. >> don't expect this is going to turn around and 12 months, 24 months, it was a short time ago the history lesson tells you this was just 10 years to recover from the last banking crisis. 10 years. we're only about five years and the current crisis. sure, things are improving slightly, maybe there is an inventory shortage but it is slowly improving but there will not be magic that pops everybody up. >> rehousing affordable housing in 2009 and is to help people

underwater on their mortgages. people eligible can have equity, but the key thing is up-to-date on your mortgage and for more information on that, go to harp program.org. nine out of 10 eligible people, eligible homeowners are not taking advantage of this program. there's possibly some help for you if you are underwater. jenna: direct peace talks between israel and the palestinians are getting set to begin in washington later this day. former ambassador to israel. as the peace envoy getting the two parties to the table is one thing, reaching a deal as we have seen over the past year is another deal altogether. former cia covert president. so, mike, what makes this time

different? >> i'm going to sound very cynical here. every president since probably fillmore has wanted to take a crack at the israeli palestinians holy grail thing. this is no different. what is odd is the time. the middle east is really in complete chaos and there is mass after mass. jenna: egypt is important for israel. under mubarak there is a peace agreement with israel that helps stability for our ally in the region. now we know egypt's unrest is there. what does that mean for israel and its safety? why the focus now between these two groups? >> this will sound very odd. it is the easiest of the bunch to get their hands on. a bit of a deflection in a way.

they can sit down with israelis, things are moving forward in the middle east. there is an element you wonder what the israelis are getting out of it for going along with it. they're going along releasing 104 prisoners. releasing over 9000 prisoners since they were signed. these 104 prisoners even though this is not a big deal, not so much. it is not so simple to say you have to sit down and talk with the palestinian authority. hamas is not getting in on this so-called peace discussions. jenna: we have seen some video on our screen, that i believe was egypt, it wasn't israel or the palestinian territory. i want to be clear about where there is violence happening. what do we do about that, and what does that mean for the region overall?

>> it speaks to why the administration now is focused on israel and palestinian peace talks. there's not much we can do in egypt. what we are seeing at this point is a muslim brotherhood, seriously overplayed their hand. they were very aggressive making a grab for power. the military i think is making the same mistake on the other side of the spectrum. it is very important for them even if it is just the impression, they need to appear to be inclusive, and they are not doing that. you cannot push the muslim brotherhood out of the way at this point so they had to find a way to bring them in on this while still allowing for the constitution and a government that represents all the people. jenna: do you think we are in egypt right now trying to find out who will be our ally, so to say, with the different agencies

in the area. are we working beyond just the politics? >> you like to think we're actively engaged from an intelligence point of view from gathering information. the cia, what they're supposed to do is work with their foreign counterparts and work their sources on the ground to understand what is happening. it is also working government to government understanding where the government is going. i believe strongly the intel community is working hard to get the best intelligence possible to the administration so we are not caught short on what is happening there. there's a great deal of concern the military, they set a timeline, but the fact that they are so aggressive right now against the muslim brotherhood shows they are misreading it. event focused on here is where we are going, more people came out to remove morsi than to get

rid of mubarak so that is legitimacy to what they're trying to do, but they have to be very careful. jenna: thank you. jon: the george zimmerman verdict has been putting a spotlight on the issue of race in america. opinion leaders tackling the issue head on, others not so ready to talk about race. is there room for improvement? our new swatch panel weighs in. how mu protein does your dog food have? 18 percent? 20? new purina one true instinct has 30. active dogs crave nutrient-dense food. so we made purina one true instinct. learmore at purinaone.com

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what some of my readers contend, we in the news media draw or members from the ranks of the human race, human beings particularly in this country with a history of racial slavery, violence, suppression, exclusion and murder often find race a very difficult subject to talk about. is he right? let's bring in our "news watch" panel. a fox news contributor. alan combs, host of the alan combs show and so let's get to you first. do the media spend enough time talking about race in this country? >> willison to talk about it after tragedy like what happened with trayvon martin. we talk about it when there's an element in the news, but we don't talk about the underpinnings of it when there is not a major news story like that. the link between poverty and

race and why that happens, the link between voter id and how those laws affect race and african-americans. they don't do enough to explain those issues but only the wake of something like trayvon martin do we have this conversation. >> the point has been made black on black crimes is a much bigger problem than white on black crimes? >> that is true, but i think we have to discuss why that happened. it is an issue of poverty, generational issues. why is it that way? is it because of the color of their skin? no, it is other environmental factors. jon: what do you think about how the media does their job? >> the challenges when somebody tries to speak honestly about these issues in the full range of these issues they get booted off the stage.

the anchor a few days ago said if you really want to help my fellow african-americans, we have to dress better, it was extremely understatement that basically what juan williams would say on this error or martin luther king was saying. you have to live by certain standards to behave yourself. lemon is being clobbered by the likes of msnbc. i would hope he has the courage as juan williams has had to keep it up. >> i think it is good, i object when he gets called uncle tom for having a different point of view than people think you're supposed to have. this courageous of him to do it. like bill o'reilly speaks out

about it and says things that may be uncomfortable but it is important we have this dialogue and that is what is healthy. >> one of the problems that has happened, one of the tremendous problems in his view is a breakdown of the family. he actually defended him on that point and said he did not go far enough. i wonder if there is a perception, again, perception versus reality when a white person says something versus when a black person says it does it fit differently. >> they come after him much, much harder. bill o'reilly says the gatekeeper doesn't prepare, but when juan williams or clarence thomas or larry elder or others say it, they go after him because they want to eliminate that thought from the discourse. those are the african-americans who say we have to reform

ourselves, this is an inward thing. he has watched the coverage of the trayvon martin trial. he is a leader in gay-rights, covering the supreme court gay-rights decision from new york city. he is a very interesting figure. let's hope he has the courage to keep speaking out that is the most important. >> when somebody like lemon or anybody else of color can make a statement that doesn't perform what the so-called majority feels, being called names, uncle tom, we can have a diversity of opinion among people of color without that kind of name-calling. >>jon: were going to have to lee it there. good discussion. thank you so much. >> thank you.

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brown: on my third day as principal, i met with the state. students had fallen behind, and morale was low. my first job was getting everyone to believe... that we could turn this around. i needed my staff to see what was possible. turning around a school, is not some, mystical, magical thing. it does take hard, dedicated work each day. i was a chemistry major in college, and then... i joined teach for america. that's the reason i'm here.

jon: quick update to the molly lines story we brought you earlier. homeowners who owe more than their home is worth opportunity to refinance. there is some good news, had been set to expire at the end of the year and has now been extended through 2015. jenna: interesting story that resonates with our history in this country. and untold story, we are learning more about it getting hits of glass and pottery and all this work from archaeologists and historians trying to uncover the history of something from the maryland community, they believe the earliest settlement of free african-americans in the united states. one of the men behind this fascinating projects joining us now on the phone. this community dates back to 1790, or thereabouts. 70 years for the civil war.

tell us about the community. >> we have to start really in 1770. during the time of the american revolutionary war as the quakers in maryland where the hell is located were very instrumented in the population. in 1740 and 1760 there were two very significant quaker earnings in the town whereby responses were seen in the records of various meeting houses. all these persons were then beginning to populate. the agricultural economy, there was a major shift in it. various crops were being shifted into those less labor-intensive and as a result of various plantations because it was too costly.

jenna: we are seeing some items on our screen excavated. what are we finding out now but the community looking back on it for the eyes of somebody from 2013? >> we're finding all kinds of artifacts speaking to the life of an early african-american community, fighting the history and culture, we can find the things records cannot records such as how they lived, what they ate, who they were in terms of occupation. various records although some do not report what the african-americans did. some of the things we find such as oyster shells, they were used early for mortar in bricks. somebody was laying bricks, they will have a lot of oysters in their backyard. jenna: i'm up against a

heartbreak. the computer will cut us off unfortunately. we hope to have you back to talk more about what you found. we will post this on our website as well. we'll be back with more "happening now."

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